Campus Chronicle

Issue date: 10/6/08 Section: News

On Tuesday September 30 the $700 billion financial rescue plan was proposed to the House of Representatives and defeated. The bill got its second chance in the Senate on Friday with a few new additions to attract more votes. An extended number of renewable energy tax breaks for individuals and businesses, such as a deduction for the purchase of solar panels. The new bill will also include a number of expiring tax breaks. The research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns.
It may be hard to understand what the bill actually calls for and its effect on the current administration and the American people. The proposal is to let financial institutions sell the government their debt.
As part of the plan the government has up to two years to purchase the debt. Think of it as a loan from the government. Ideally the loans could be sold at a later time for a net gain. Private money managers will oversee the purchased debt while they are in the government's possession. Another part of the plan is to increase the nation's debt ceiling. It was originally set to rise to $10.6 trillion for the fiscal year of 2009 last week on October 1. Under the plan the debt ceiling will be raised to $11.315 trillion.
The situation, handled by the Treasury Department, is the biggest economic intervention by the government since the Great Depression. "Clearly something needs to be done, and the market dropping 400 points in 10 minutes is telling you that," said Chris Johnson president of Johnson Research Group.
The new bill and economic crisis is a prime environment for the Presidential Candidates to strut their economic plans. Each candidate is taking advantage of the current economic situation to try to convince voters that their economic plan is best. While Senator Barack Obama is rallying in La Crosse, Wisconsin, Senator John McCain is giving an economic speech in Kansas City, Missouri. Both states are toss-up states; Wisconsin with 10 electoral votes and Missouri with 11. According to CNN, Missouri is leaning toward McCain.
Both candidates voted on the bill on Wednesday in Washington. McCain said on Wednesday that the resurrected bill isn't perfect but warned that without it the current economic crisis could become a disaster.
McCain also blames the crisis on Obama and other Democrats, stating that the crisis could have been avoided if they would have put restraints on mortgage lenders Fannie Mae and Freddie Mac.

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